Fashion brand Burberry, a big exporter to consumers in China, was one of the worst hit

The FTSE 100 fell by 72 points yesterday as luxury goods and mining firms suffered from China’s unexpected devaluation of the renminbi.

The Chinese devaluation, news of which broke after the FTSE closed on Monday night, saw Burberry shares open 12p down on the previous day at 1,595p, before falling throughout the day to finish at 1,536p, a total fall of 4.42 per cent.

Glencore was hit even harder, the day’s biggest casualty with shares suffering a 7.3 per cent loss and closing at 191p, indicating that the increase in costs in China have fuelled analysts’ increasingly widespread belief that Glencore will fail to meet its earnings targets this year.

Ben Davis, analyst at Liberum Capital, said he believed commodities traders had overreacted to the news of devaluation. “It’s been tough in China for a while now so it’s not really a surprise to us,” he said.

China’s decision to reduce its currency value to its lowest in almost three years, framed by the People’s Bank of China (PBOC) as a “one-time correction”, was sparked by a run of poor economic data and a desire to boost exports.

The PBOC insisted the devaluation was undertaken as part of a more general move to orient the renminbi to the market, but turmoil on the markets suggests traders may fear it marks the first in a series of deflationary moves to improve China’s international competitiveness.

Pessimism was not universal, however. The CBI’s Rain Newton-Smith said that “although a depreciation in the renminbi against sterling will put pressure on UK exports to China in the short-term, the effect on Chinese growth should be beneficial to UK exporters in the longer term”.